ACCT1501 Practice Exam Questions & Solutions
QUESTION 1 Accounts Receivable (8 marks)
A company records an allowance for doubtful debts. On 1 July 2015, the allowance
has a credit balance of $15 000.
Sales for the year to 30 June 2016 are $350 000.
Prepare the journal entry to
recognise a bad debts expense based on 2% of sales.
(2 marks each section, no part marks)
On 1 May 2016 a customer owing $1000 goes bankrupt. Prepare the journal entry
to write-off the bad debt.
Assume the journals for parts i) and ii) have been processed.
An ageing analysis
of outstanding debts finds that the balance of the allowance at 30 June 2016
should be $25 000.
Prepare the adjusting journal entry.
Prepare the closing journal entry for bad debts expense